The complexity of auto insurance often deters dealers from making it available, but the increasing number of uninsured buyers is a reason to give it greater consideration.

This is due in part to the stricter enforcement of insurance licensing regulations and the explosive growth of the pre-owned vehicle segment.

Also, first-time car buyers may be unsure of which comes first: buying a vehicle or obtaining insurance, resulting in a visit to a dealership while uninsured.

Offering insurance at the point of sale can help streamline the process and satisfy all of a buyer's needs.

Convert Lookers to Buyers

Beverlee Hamm, finance director at South Bay Lincoln Mercury and Manhattan Beach Toyota in California, says point-of-sale insurance is a great way to get casual browsers to commit to a purchase.

Spot deliveries prevent customers from looking elsewhere or reconsidering the purchase altogether. Providing insurance through the dealership can eliminate one excuse customers may use to put off a purchase.

"The key is to have good salesmen who create urgency to get a car right away," Hamm says.

She estimates that 15 to 20 percent of buyers at her two dealerships use the insurance policies sold through the dealership's auto insurance provider.

Meet Lenders' Requirements

Most lenders require verification of permanent coverage before they will approve a loan or lease. A customer who has temporary insurance is at no greater advantage than an uninsured buyer in the eyes of the finance company. Permanent insurance is essential to protect the dealer, the lender, the buyer and the public at large.

Some of the captive finance arms have begun offering vehicle insurance through their dealerships. This is often available for insured as well as uninsured buyers and can offer premium savings on a policy.

Protection of the vehicle is of utmost importance to the dealer and lender because there is no control once the buyer leaves the lot.

ExpressLink of Encino, Calif., has been involved in point-of-sale auto insurance for more than 20 years with its InsureExpress service.

Guaranteed, permanent coverage is provided to every licensed driver, regardless of driving history. This takes point-of-sale insurance beyond the temporary coverage other carriers offer until long-term insurance can be established.

ExpressLink has partnered with ADP, Reynolds & Reynolds and UCS to maximize the efficiency of their dealer management systems. Through this partnership, InsureExpress software can be activated if a dealer chooses to utilize it.

"Auto insurance is really the last unprofessionalized part of the F&I process," says Dale Penn, vice president of sales for ExpressLink. A dealership can provide one-stop shopping by making auto insurance available to its customers.

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How It Works

During the negotiation of a sale, the issue of insurance is always discussed. When a buyer needs coverage through the dealership, the F&I office can either call an outside vendor or a company such as ExpressLink.

Because the InsureExpress program is integrated into a dealership's DMS, the forms can be automatically filled out based on customer information already provided. This is an important time-saver in the F&I office.

Penn says the initial deposit is kept low to ensure that auto insurance is not the factor that prevents someone from buying a vehicle. The coverage is specific to each state and meets or exceeds all minimum financial requirements. The policy is provided directly to the customer from ExpressLink.

Beyond the initial coverage, ExpressLink offers full six-month policies that can be geared to an individual's needs. The premium is based on the customer's motor vehicle report and no one is denied. This can be a relief to a buyer who may have a few blemishes on his driving record.

Addressing Compliance Issues

ExpressLink promotes its product as a risk management tool rather than just basic insurance. The system is built specifically for auto dealerships and the company is not selling insurance in any other market.

InsureExpress is continuously updated to meet state and federal laws addressing customer privacy and dealership compliance. To protect dealers, all information passed between ExpressLink's system and the DMS is encrypted.

The company has insurance licenses in every state in which it offers coverage. This is often an obstacle for other insurance providers due to differences in laws between the states. A dedicated compliance staff monitors the court system and updates the policies accordingly. According to Penn, "Continuous innovation is essential because the rules keep changing."

Currently, 80 percent of vehicle sales in the United States are made in states where InsureExpress is offered.

Many dealers have come to realize that continuous training tends to produce better results than a refresher course once or twice a year. In keeping with this philosophy, ExpressLink provided continuous, on-site training to every dealership in its network.

Live service agents located throughout the country visit each store once a week. Penn says this constant presence makes dealers feel confident about the program and is especially beneficial to dealerships with frequent staff changes.

Sidebar: Avoid Point-of-Sale Pitfalls

When choosing a point-of-sale insurance provider, look for a company that:

  • Offers permanent coverage instead of only a temporary plan

  • Insures the vehicle, regardless of who is driving

  • Addresses compliance issues specific to each state

  • Provides regular on-site training

  • Provides the dealership with written assurance from the insurance carrier

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